Payday loans offer easy access to money or cash advances. These can be done at online payday loan shops, or one busy street corners. Easy access to a reliable payday loan store can help or hurt you depending on your personal finances.
The premise is simple: you need cash and you need it now. However, you don't get paid for a week. That's when a payday loan store can help -- they will provide an upfront cash advance ... for a price. Generally, these loans are tied to an asset, like your car, or to money that you will be given, as in an advance against future earnings.
For personal finance and long term investing purposes, a payday loan is a 'no-no'. The interest rate charged is generally high, and late payments can quickly reach the amount of the original loan. When possible, use cash savings to pay for purchases and do your best to avoid large interest rates.
That being said, there are emergency situations that demand payment, and a payday loan can be a life-saver. Just go into the loan understanding the opportunity cost of the interest rate charged you. Ask yourself if there is a cheaper way to get the money, or if the purchase is truly necessary. Often the money can wait until you're paid, saving you considerable money.
If you have a tax attorney or financial advisor, check with them before using a payday loan.
If you have recently used a payday loan, and are willing to share your experience, please contact us with the details.